Points for both sides in who-built-it debate

Government had role at firms that Brown visited

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A look at the businesses Senator Brown has visited recently reveals a group of entrepreneurs who worked hard and took great financial risks.

By Noah Bierman
Globe Staff
September 04, 2012

Hank Miller’s grandfather started the family’s ship outfitting business more than a century ago at the Boston Seaport. Harry Miller Co., now a textile firm based in Roxbury, employs 70 people whose livelihood can be traced to that man, and the risks he took long ago.

But in recent years, the company has also thrived with the help of government military contracts and financing for its factory.

Miller’s company is like many visited by Senator Scott Brown in recent weeks as he has argued that individual initiative, not the government, builds business success. Brown’s visits, some of which have been stops on his “Thank You for Building This” tour, are a retort to Elizabeth Warren, his Democratic challenger, and her emphasis on the role government plays in helping businesses thrive. It is an argument about the very definition of American capitalism.

But as Miller’s example shows, it is more complex — and the candidates have more in common — than partisans might acknowledge.

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A look at the businesses Brown has visited recently reveals a group of entrepreneurs who worked hard and took great financial risks.

But many of the businesses have sustained their success, or grown in some cases, with the help of government contracts or tax credits, in addition to the benefits of having basic roads, sewer lines, and school systems — the government-provided assistance that Warren has highlighted as essential to all commerce.

In some cases, the interaction with government has been large. In others, it has been small.

“As a business we’re wise to work with them so we can be more successful, so that we can employ more people,” Miller said, referring to the $2.9 million in grants and low-interest loans his company used to finance its building. “Is that necessary for the business? My opinion would be no. Our business would still be around and successful, with or without that.”

Miller said his business would also be fine without its military work, about 20 to 25 percent of its production, which it wins in an open bidding process.

But Miller is quick to point out that government incentives for companies like his help preserve a dwindling manufacturing business in Massachusetts, and the United States as a whole. He covers the majority of his employees’ health premiums and takes steps to avoid pollution, something his Chinese competitors do not have to do, he said.

Neither Brown nor Warren has been wholly dismissive of either government or the private sector, although their rhetoric can sometimes make it sound as though they are.

Warren, in a video recorded last year that outlined her position and helped make her a national sensation on the political left, said “there is nobody in this country who got rich on their own.”

She talked about the need for businesses to repay “the rest of us” for the roads, police protection, and education of workers that help businesses.

“You built a factory and it turned into something terrific or a great idea — God bless. Keep a big hunk of it,” Warren said. “But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”

Brown has seized on that video and a related comment by President Obama in July: “Somebody invested in roads and bridges. If you’ve got a business, you didn’t build that; somebody else made that happen.” Obama was trying to echo Warren’s argument that infrastructure is essential to business.

But opponents have clipped the comment and said the rhetoric revealed a fundamental hostility to businesses, dismissing the risk, hard work, and creativity required to build something from the ground up.

Brown has reacted to the comments by both Warren and Obama by pledging to businesses around the state that “I will never demonize you.”

“It’s not a government-created job that’s going to get us out of this economic mess,” Brown said at a partly constructed community bank in Framingham as he kicked off his business tour. “It’s people like this who are working very hard to create small-business jobs.”

But even as Brown has sometimes downplayed the role of government and talked about reducing its size, he has also talked about the need to avoid large spending cuts that could endanger businesses. It is a tacit acknowledgment that government does play a role in stimulating the economy.

“Contrary to Professor Warren’s belief, individual initiative is not a byproduct of big government, and businesses aren’t built thanks to government contracts,” Brown’s campaign manager Jim Barnett said. “Hard-working people build businesses. If these people happen to provide a service the government needs, all the better, but that doesn’t mean government is responsible for their success.”

Warren contends that Republicans have been taking Democrats’ arguments out of context and that GOP policies — including oil subsidies for multinational conglomerates — help big businesses at the expense of small businesses that have to pay the bills.

“There’s a real difference between how Washington works for big businesses and how it works for small businesses, and this is a big difference between Scott Brown and me,” Warren said last week while touring a small technology firm in South Boston. “Washington is rigged to work for those who can hire an army of lobbyists and an army of lawyers.”

Polar Beverages, a Worcester company where Brown held a small business event, received $885,000 in federal contracts over the last decade, selling soda to schools, prisons, and military bases, according to government records, “a decimal point” of the company’s business, according to Chris Crowley, executive vice president and treasurer of Polar.

Polar also received a discount on its property taxes under 10-year deals approved in 1997 and 2003, when the company agreed to an expensive retrofit of an old factory for its expansion rather than move out of state.

The combined total value of city and state tax credits was as much as $2.4 million. In exchange, the city increased its tax base and retained the jobs.

Despite the tax credits he has received, Crowley says he sees government as his business’s biggest threat, because of the potential for regulation, including New York Mayor Michael Bloomberg’s proposal to limit the sale of large soft drinks.

Legion Construction in Chelmsford, which Brown also visited last month, has received $155 million in federal contracts since 2006, including $9 million under the federal stimulus program, according to government records.

Commodore Builders in Framingham, where Brown kicked off his tour Aug. 3, restored the Haffenreffer Brewery, a $10 million project that opened in 2006. It was financed with tax credits provided by both the City of Boston and the US Department of Housing and Urban Development.

It also upgraded three laboratories for the Environmental Protection Agency in 2008, and it completed the Franklin Park Zoo gorilla exhibit in 2007, which was funded by a combination of private donations, state dollars, and city funds left over from the 2004 Democratic National Convention planning.

Joe Albanese, owner of Commodore, said government work is a small part of his business. He is in favor of government spending on infrastructure but did not like the tone of Obama’s comments.

“I’m really frustrated by what Obama said, the fact that we didn’t build our business,” he said. “I don’t think that the private sector is unwilling to pay for the services we get. None of us are getting handouts.”

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